While a ledger may seem like a simple accounting device, it is actually an extremely helpful tool in assessment collection. A ledger is not just a document full of numbers. Ledgers – well, good ledgers – allow an Association, homeowner, Association’s attorney and even a court to see the timeline of events that have happened since the homeowner took title to the property – you could even say it tells a story. They pinpoint the date the account became delinquent and how it has progressed since that time. They can also be a key piece of evidence at trial. A good ledger can be the difference between being able to collect a delinquent balance and having to make the difficult decision to write off amounts that would otherwise be considered due and owing.
A ledger should have a clear description of the charges as well as the credits and payments. Each charge and payment should be a distinct and separate item on the ledger.
A ledger should reflect the amount and type of payment that has been made by a homeowner.
The date associated with the payment should reflect the date the payment was received. This will ensure that if a payment is received late it is accurately reflected on the ledger as to when it was received, not just posted, thereby allowing a homeowner as well as a court to understand when and why the Association charged a late fee.
A ledger should have a beginning balance and should ideally run from the date the homeowner took title to the property through the current date. A ledger should also have a running balance that is easy to understand based on the charges and payments made. The running balance should be next to every entry made on the ledger, not just at the bottom as a total due.
A ledger should reflect the correct name of the record owner or owners of the property as well as the property address and any mailing address provided to the Association by a homeowner.
If possible, a ledger should have legal fees and charges that have been incurred by the Association when a homeowner’s account has been turned over to its Attorney for collections.
Ledgers are a fundamental aspect of association governance, and good ledgers can help make for great collections!